Vietnamese timber exports to the US, EU and UK are dropping. Will this cause Vietnam’s efforts to ensure legal sourcing of its timber industry to lose momentum?

Forests Aug 22, 2022
Kerstin Canby and Phuc Xuan To

Vietnam exports of timber products to the UK, EU, and US are down. Export orders since the beginning of 2022 are down significantly, with a 38% year-on-year decline in June and a continued drop by 5.5% in July. Forest Trends supported a Vietnam Timber and Forest Products Association (Vifores) survey of 52 timber companies and found that most decreased their revenues in EU, UK, and US markets, with 71% expecting orders to continue to decrease throughout this year. 

Why is demand down from these lucrative markets? All three are navigating high inflation and interest rates and increased freight costs due to the conflict between Russia and Ukraine (and Brexit, in the case of the UK).  

Another contributing factor is excessive retail inventory in the US and UK, and presumably across the EU as well. After struggling to keep pace with historic consumer demand during the COVID-19 pandemic as consumers embarked on housing renovations, retailers then ordered too much. Certain large retailers are now desperately trying to move excess inventory via large discounts on furniture and other materials – and this trend is not likely to abate soon. Coupled with a stalled demand for housing renovations as consumers resume travel and other recreational activities, this wood product surplus is fueling export declines in timber producing countries like Vietnam.  

David Hopkins, the Chief Executive of Timber Development UK, is encouraging Vietnamese manufacturers and exporters to invest in marketing and promoting Vietnamese products among UK consumers, citing the recent efforts by the Vietnamese government and industry to ensure lower risk of sourcing their timber from illegal deforestation and greater sustainability as major points. The EU, US, and UK all have regulations on the import of timber and other forest products and ensuring the legality of such products in their supply chains. Hopkins is optimistic, noting that “the fact that buying goods from Vietnam has a very low risk of illegality is a really positive story.” He emphasizes that promoting this concept is critical not only for the UK but also for others around the world importing Vietnamese wood products.  

The key question for Forest Trends researchers moving forward is whether the regulated markets of the EU, UK, and US are losing importance for Vietnamese exports. If so, the incentive for Vietnamese industry to ensure legality will dissipate. If, however, this decline is observed across all exports to all markets, EU, UK, and US leverage on legality can be maintained.  

Enjoyed reading this post? Share it with your network!

Viewpoints showcases expert analysis and commentary from the Forest Trends team.
Connect with us on Facebook and Twitter to follow our latest work.